Gold Hits Fresh High as Fading Fed Hike Bets Undermine USD
Gold prices continued their upward momentum on Monday, reaching a fresh high of $4,650 since mid-May. The metal's strength was fueled by fading bets for an immediate interest rate hike by the US Federal Reserve (Fed) and softer US Treasury bond yields.
The US Dollar (USD) languished near an over three-month low amid receding expectations for Fed policy tightening in the near term. Market expectations shifted towards a policy hold at the upcoming September 15-16 FOMC meeting, following Tamer July US inflation data that cooled expectations for near-term Fed policy tightening.
US Treasury Secretary Scott Bessent's announcement of aggressive bond-buyback operations also kept US bond yields depressed below a multi-year peak, failing to assist the USD in registering any meaningful recovery. However, geopolitical uncertainties, including Iran's Supreme National Security Council secretary Mohsen Rezaei's warning that the Islamic Republic would halt all oil exports through the Strait of Hormuz if economic war continues, kept the war-risk premium in play and limited the downside for the Greenback.
From a technical standpoint, gold's move above the 200-day Simple Moving Average (SMA) and the 61.8% Fibonacci retracement level was seen as a fresh trigger for bulls. The MACD indicator stayed in positive territory with rising values, hinting at persistent upward momentum. However, overbought conditions in the RSI at 71.77 could limit immediate upside.
Looking ahead, market participants will closely watch the release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday and Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium for cues about the central bank's future policy path.